Soft construction spending data pushes US GDP estimates into negative territory

A few months ago many US economists were talking about 3-4% growth in the first quarter of the year. Poor weather began to eat into those estimates and then yesterday’s advance reading of 0.1% compared to the 1.2% consensus caused a re-think.

Today’s soft construction spending caused another rethink. Spending rose just 0.2% in March and February spending was revised to -0.2% from +0.1%.

Now, Deutsche Bank estimates that Q1 GDP contracted 0.4%, Barclays lowered its estimate to -0.2% and Goldman Sachs cut its tracking estimate to -0.1%.

Much of the weakness will be reversed in the second quarter and expect to see the Q2 consensus rise from the current 3.0% consensus.